1/2 Cent Capital Improvement Sales Tax FAQ

1. Why does Sikeston need a 1/2 sales tax increase?

For over ten years, city sales tax and property tax revenue has been flat, not keeping pace with rising costs. For over ten years, the city has been “cutting the fat” – reducing costs and becoming more efficient - in order to provide quality services without increasing revenues. The city has not had a dedicated funding source for capital improvements since 2004, when the ¼ cent capital improvement sales tax expired.

2. How much will an additional ½ cent generate? Approximately $1.4 million per year.

3. Where will it be spent? Public Safety, streets (including stormwater), and parks.

4. How much will be allocated to each of the identified areas? Half will be used to pay for capital improvements currently funded out of the General Fund. The other half will fund new capital improvements such as street and park projects. The General Fund savings will be used to make public safety salaries more competitive with surrounding communities.

5. How much would a ½ cent sales tax add to a weekly $100 grocery purchase? $0.50 per week.

6. How long will this tax be in effect? The tax would have a 10 year sunset provision, after which voters could be asked to reauthorize it.

7. What are the consequences if this tax doesn’t pass? If this tax doesn’t pass, the city will not have the resources to pay a competitive wage to our Public Safety Officers. We will continue to lose officers to neighboring communities, and it will become harder and harder to replace them. The average level of experience of officers will continue to decline as we have more rookies and fewer senior officers on the force. The city will continue to do minimum maintenance on streets, stormwater and parks infrastructure. Facilities such as the Recreation Complex, which 40 years ago was state of the art and the pride of Sikeston, will continue to age and fall behind other communities.

8. How does this differ from the 2004 tax? The 1 cent 2004 sales tax was pledged to fund Public Safety, LCRA, and SAHEC. The ¼ cent SAHEC sales tax and ¼ cent capital improvements sales taxes were allowed to expire in exchange for the 1 cent tax, and property taxes were reduced by 21%.The new sales tax would reestablish a dedicated funding source for capital improvements, and free up general revenues for other uses.

9. Why wasn’t the 2004 tax sufficient? When the 1 cent sales tax was passed in 2004, spending plans were made with the assumption that revenues would grow 4% annually. Instead, the recession hit and revenues have been almost completely flat for 10 years and never achieved any long term growth. While costs for personnel, insurance, fuel, construction materials, etc. all grew, revenues stayed flat. Plans for the funds therefore had to be scaled back. DPS had planned to increase staffing from 70 to 87 employees. Staffing has never reached more than 80 employees due to funding shortfalls, and salaries have not been sufficient to recruit and retain enough people to stay near full staffing. If revenues had grown as predicted in 2004, annual revenues would now be $3,000,000 more than they are today.

10. How do we plan to police these funds to make sure they are allocated as presented? A separate Capital Improvements Sales Tax Fund would be created to budget and account for the revenues and expenditures associated with the new sales tax. The City Council would review both the budget and the audited expenditures each year. The city undergoes an independent audit every year by a CPA to ensure that funds are expended in accordance with the law and generally accepted accounting principles.

11. What improvements should citizens expect to see from a ½ cent sales tax increase? The city will be able to make Public Safety Officer salaries competitive with other communities nearby, and will be able to make additional investments in streets and parks. A ½ capital improvements sales tax will provide funding for capital improvements such as patrol vehicles, snow plows, ball field improvements, stormwater improvements, and street and park maintenance equipment and major projects. By providing a dedicated funding source for capital improvements, it will allow the city to use general revenues to bring our public safety officer salaries up to the level of competing communities in our region, so we can recruit and retain the kind of quality officers we need to keep Sikeston safe.

12. What are the sources of revenue for the city other than a sales tax increase? The city’s largest revenue source is sales tax. Other current revenue sources include property taxes, franchise taxes (applied to utilities such as natural gas, telephone, and cable), licenses and permits, gas tax, rents and leases, grants, court fines and fees, and charges for services (mainly solid waste fees). The only options to significantly increase revenues are sales tax or property tax.

13. Why pick sales tax over other sources of revenue? Sales taxes are paid by everyone who benefits from City of Sikeston services (such as visitors who use our streets, parks, and public safety services), and not just by Sikeston residents.

14. How do we compare to other cities in relation to the number of employees required to staff administration, police, fire, public works, and parks and recreation, adjusted for population? Cape Girardeau and Poplar Bluff are the most relevant comparison cities in the region, in terms of population and scope of services. Utility workers (water, sewer, electric, and gas) have been excluded from the comparison because they are not included in the City of Sikeston budget. Of these comparison cities, Sikeston has the fewest total city employees per 1,000 city residents. See table below:

City Employees Per 1,000 Residents:

Sikeston

Cape Girardeau

Poplar Bluff

Population

16,318

37,941

17,023

Parks Employees

7.0

115.0

22.0

Parks per 1000

0.4

3.0

1.3

Public Works Employees

19.0

72.1

39.0

Public Works per 1000

1.2

1.9

2.3

Public Safety Employees

80.0

178.0

81.0

Public Safety per 1000

4.9

4.7

4.8

Other Employees

15.0

31.1

13.5

Other per 1000

0.9

0.8

0.8

Total Employees

121.0

396.2

155.5

Total per 1000

7.4

10.4

9.1

15. If a ½ cent sales tax is approved, how will our rates compare to other communities? If a ½ cent sales tax is approved, the total rates in the City of Sikeston, including city, county, state sales taxes, will be as follows:

For comparison, here are the rates of some of the larger communities in the region:

Poplar Bluff: 7.725% - 8.725% Cape Girardeau: 7.975% - 8.975%

Additionally, there are many communities throughout the state with sales tax rates above 9%.

16. If public safety officer salaries are such a big issue, why did the city spend millions of dollars on a new public safety building? The former DPS headquarters was built in the 1930s as a Post Office. The building had become inadequate in numerous ways: it was too small, maintenance costs were high, it was not earthquake resilient, the holding facilities were too small and did not meet modern safety standards for ventilation and egress, suspects and victims could not be adequately segregated, there was no backup power except for dispatch, there was not enough space for a multi-agency Emergency Operations Center, and weapons, ammunition, and evidence all had to be stored at remote facilities because there was not space at headquarters. The new building is a purpose-built modern police facility that addressed all of the inadequacies of the old building.

17. What are the turnover rates for sworn officers in DPS? Year # of Terminations Turnover Rate % Related to Money

Year

# of Terminations

Turnover Rate

% Related to Money

2009

3

4%

67%

2010

4

6%

75%

2011

8

12%

25%

2012

7

10%

14%

2013

12

18%

42%

2014

7

10%

71%

2015

5

7%

60%

18. Sikeston is getting a new airport terminal building. Are sales tax revenues being used to finance this project? No local property taxes or sales taxes are being used to finance the airport terminal building. Approximately 67% of the funds are federal grants, and the remaining local portion is being paid from property sales including the rodeo grounds (sold many years ago) and the back nine of Fox Haven, which legally must be used on airport projects.

19. BMU recently raised rates. How much of that money will be available to the city for helping provide for all city services? If the answer to the above question is, “Little to none,” then why? BMU rate increases are used solely to cover the costs of providing water, sewer and electric services to residents of Sikeston. The rates paid by Sikeston residents are still below the cost to provide the services. The power plant was built by selling bonds (i.e. borrowing money). The bond covenants prohibit general transfers to the city except for limited economic development dollars and donation of services to the city. To do anything more would put the BMU at risk of defaulting on their bonds. BMU contributes up to $250,000/yr to the city for economic development purposes. BMU donates water, sewer and electric services to all city facilities, including City Hall, the Clinton Building, the animal shelter, fire stations, DPS headquarters, the city garage, and all other parks and work sites. The services were valued at $285,000 for the past twelve months. BMU also donates the electricity for street lighting, at a value of approximately $240,000/yr.

The total of BMU support to the city is up to approximately $775,000/yr.

20. Over the past several years, as a citizen of Sikeston, I have observed the following. How were these projects funded?

a. New BMU Building: The new BMU building was paid for out of reserves generated from excess power sales (i.e. sales to other communities), and not from revenues generated by electric/water/sewer rates paid by Sikeston residents.Rates paid by Sikeston residents are very competitive:

Residential Electric Rates per kilowatthour (in cents)

City/Utility

Rate

Sikeston

5.4

New Madrid

6.7

Kennett

7.5

Poplar Bluff

8.5

SEMO Co-op

9.9

Ameren

10.5

Columbia

10.9

b. City acquisition of old mall: The Village Green Property sat mostly empty and blighted in a highly visible location on Sikeston’s busiest commercial corridor for many years. The city purchased the property with the intent to demolish it and market the vacant property to private sector developers. No tax dollars were used to purchase the property; it was purchased using the proceeds from the sale of the donated Brown Shoe Building. The city is actively marketing the property and has had discussions with a number of developers who may be interested in acquiring and redeveloping it.

c. City acquisition of a golf course: An opportunity arose to lock up the ground strategically located between two of the biggest visitor destinations in Sikeston – the Rodeo grounds and the Recreation Complex. The BMU used reserve funds generated from the sale of excess power (not funds from Sikeston customers) to purchase the property and make sure it remains in the control of the community. Planning for the use of the property will be a public process undertaken in the future.

d. City acquisition of railroad rights-of-way: The city obtained the trail rights to the railroad property, which will allow the city to clean up and eventually build a trail along the railroad corridor. No tax dollars were used to purchase the property; it was purchased using economic development funds obtained through property sales and leases. Numerous leases of portions of the property generate approximately $40,000/yr in revenue for the city.

e. Obligation of funds (up front) in relation to a TIF: The city will participate in the movie theater TIF district by constructing the minimum amount of infrastructure to allow the movie theater to open and adequately handle the associated traffic. No tax dollars are expected to be used for the infrastructure construction; it will be accomplished using economic development funds obtained through property sales and leases. Furthermore, the city will be reimbursed for the expenditures by the TIF revenues.

f. DPS “toys” such as the bomb squad equipment: Several large pieces of equipment including the mobile command unit and bomb squad truck and robot have been funded with Homeland Security Grant with no local match required. The only costs to the city are fuel, maintenance and insurance for a grand total of approximately $10,000 per year. Previously this type of equipment had to be brought in from other parts of the state when it was needed in Sikeston, and DPS has had to wait 5 to 8 hours for its arrival. During that time businesses had to be shut down due to bomb threats. Having the equipment locally available at a relatively low cost makes Sikeston a safer community.

21. Why does DPS use Chevrolet Tahoes as patrol vehicles? Since the Ford Crown Victoria Police Interceptor was discontinued, DPS has spent several years testing various other police vehicles on the market. The Tahoe was selected as the most useful and cost effective model for several reasons: Value and Longevity – Our experience testing different vehicles has shown that the Tahoes, while only costing a few thousand dollars more than the sedans, have a much longer useful life. The larger frame and drive train has proven more durable and long lasting, easily justifying a slightly higher initial price.

Cargo space - The sedans, such as the Chevrolet Impala and Dodge Charger, do not have enough equipment room for the police and fire equipment that our officers carry in the vehicles. Because patrol officers also respond to fire calls, they carry standard police equipment plus firefighting bunker gear and self-contained breathing apparatus and tanks. Members of the Tactical Team also carry tactical gear at all times. The Tahoe has been the only vehicle with adequate cargo space.

Fuel Mileage – When fully outfitted with police and fire equipment, including radios, cages, prisoner seats, weapon racks, cameras, bunker gear, etc., the gas mileage is not significantly different between the Tahoes and smaller sedans.

Front Wheel vs. Rear Wheel Drive – Front wheel drive vehicles, such as the newer model police sedans, do not perform as well in a city environment. They do fine in highway environments or for agencies that trade in vehicles with less than 50,000 miles, but they are not as durable as rear wheel drive vehicles when more miles are put on them.

Additionally, the police model Tahoes are not the luxury vehicles some people may be accustomed to. They are bare bones models with rubber floors, fabric seats, and basic equipment to which police specific gear is added.

22. Can we sell some parks to save maintenance money and generate some income? Possibly, and city staff is beginning to analyze opportunities to sell some of the underutilized parks in order to generate income, reduce maintenance burdens, and realize development potential. Many of the parks were originally purchased or developed with state or federal grant money that restricts our ability to unilaterally sell the property. It may still be possible to sell those properties, but approval will have to be obtained from federal and state agencies first.

23. What will be the wording on the ballot? Shall the City of Sikeston impose a sales tax of one-half of one percent for the purpose of funding capital improvements?

24. When will the new sales tax rate be effective? The new tax rate will be effective April 1, 2016.